LIBYA

COUNTRY OVERVIEW

LOCATION AND SIZE.

Libya is a North African country, which shares a border with the
Mediterranean Sea to the north, Egypt and Sudan to the east, Niger, Chad
and Sudan to the south, and Algeria and Tunisia to the west. With
1,759,540 square kilometers of area (679,358 square miles), it is
slightly larger than the State of Alaska. The length of its land border
and its coastline is 4,383 kilometers (2,723 miles), and 1,770
kilometers (1,099 miles), respectively. With the exception of Sabha,
located in the south, all its major cities—including the capital
city of Tripoli—are along its coastline.

POPULATION.

Libya's population of roughly 5,115,450 (est. July 2000) has seen
an annual growth rate of 3.5 percent since 1975, when it was 2,400,000.
With a predicated annual growth rate of 2.1 percent, the population will
reach 7,600,000 in 2015. In 2000, the birth and death rates were 27.68
births per 1,000 population, and 3.51 deaths per 1,000 population,
respectively.

The Libyan population is relatively young, with 64 percent of the
population between the ages of 15 and 64. Only 4 percent of Libyans are
over the age of 64. (In contrast, almost 13 percent of the population in
the United States is over the age of 64.) In 1998, 86.8 percent of the
population was living in urban areas, particularly in Tripoli and
Benghazi; this percentage marks a significant growth in urban population
since 1975, when it accounted for 60.9 percent of the population. Urban
dwellers will constitute roughly 90 percent of the population by 2015.

INDUSTRY

While its share of GDP is only 52.8 percent (est. 1994), industry is by
far the most important segment of Libya's economy, since it
encompasses the oil industry, which is vital to the country's
economic survival.

OIL.

As the main export item, oil dominates Libya's mining industry.
Estimated at 29.5 billion barrels in 1998, Libya's oil reserves
ensure exports until 2053 at the 1999 export level of 1,137,000 barrels
per day (b/d). The Libyan government owns 5 oil refineries in Libya as
well as a network of oil refineries in Italy, Switzerland, and Germany
in partnership with European oil companies.

Libya's oil production has decreased significantly since the
1970s. In 1975, the Libyans reduced their production from 3.32 million
b/d to 1.48 million b/d, for fear of drying up their resources.
Managerial problems, OPEC quotas, and sanction-created shortages of
spare parts and investments have further lowered production. Sanctions
have also resulted in a decrease or stoppage in production of certain
oil products (e.g., gasoline), which then had to be imported. American
sanctions are still in force, but the 1999 suspension of UN sanctions
opened the way for Europe's involvement in Libya's oil
industry.

MINING.

With estimated gas reserves of 1.5 trillion cubic meters, Libya is also
rich in natural gas, but most of its reserves are undeveloped. The
Libyan government has tried to develop them to increase the life of its
oil reserves by replacing oil with gas for domestic consumption, and
also to increase its gas exports. Development projects include 2 gas
pipelines to connect 4 new gas-powered electricity generators to the
national grid, and a US$5.5 billion project with Italy for the
development of onshore and offshore gas reserves and the construction of
an undersea pipeline to export gas to Italy. On average, 20 to 25
percent of annual gas production (6.4 billion cubic meters in 1998) is
exported mainly to Italy and Spain.

Iron ore and salt are other major resources that play a role in
Libya's economy. The iron ore resources are estimated at 700
million metric tons and are located in southern Libya far from its iron
and steel complex. Their development has been delayed due to the absence
of financing for building the required rail link. Libya's salt
mines—located mainly around Tripoli and Benghazi—produce
30,000 metric tons annually. There is also a limited extraction of
construction materials (e.g., limestone, clay, and stone).

MANUFACTURING.

Libya's manufacturing industry is not well-developed. Ambitious
projects in heavy industries (e.g., aluminum and fertilizer complexes)
have been partially realized at best, as various sanctions have limited
funds, denied foreign investments, and severely restricted transfer of
technology and sale of required equipment. Manufacturing establishments
suffer from a shortage of spare parts and poor maintenance, which lower
their production. The current share of this industry of GDP must be well
below its 1994 share of about 10 percent.

Besides a few
joint ventures
(mainly with Italy), most manufacturing establishments are Libyan. They
are mostly small- and medium-sized factories producing light and
consumer goods
(e.g., foodstuffs, wood, paper, textiles, and VCRs). The limited heavy
industries include an iron and steel complex, a petrochemical complex,
and a pharmaceuticals plant. Libya produces about 3,000 cars a year, and
assembles trucks in joint venture with Italy. The manufacturing products
are far short of domestic demand, making Libya very dependent on
imports.

CONSTRUCTION.

Thanks to extensive hydrocarbon supplies and water projects,
construction is a major industry. Two long-term major projects are the
construction of the Great Man-Made River to transfer water from
Libya's southern water resources to its major urban and farming
areas in the north. It has received an average of 10 percent of
government annual expenditures since 1984. Another project is a large
gas development and pipeline construction with Italy. There have been
modernization projects in major cities including Tripoli since the
suspension of UN sanctions.

SERVICES

Services form a growing economic sector, which accounted for about 40
percent of GDP in 1994. Given the suspension of the UN air
embargo
against Libya in 1999, the expected growth in tourism in the first
decade of the 21st century should strengthen the role of this sector in
the Libyan economy.

FINANCIAL SERVICES.

The Libyan government controls the financial system, including banking,
insurance, and investment activities. In 1970, it nationalized all
financial institutions, but economic problems forced it to allow the
operation of private banks in 1993. With one exception in Misurata, no
private bank has been established yet. Nor is there any foreign bank,
excluding the Arab Banking Corporation, a Baharini bank partly owned by
Libya. The banking system consists of the Central Bank of Libya and 8
major banks: the Agriculture Bank, the Jamahiriya Bank, the National
Commercial Bank, the Savings and Real Estate Investment Bank, the Umma
Bank, the Wahda bank, the Sahara Bank, and the Libyan Arab Foreign Bank.
The last 2 are among the top 1,000 banks of the world. State-run
companies provide insurance and business services. The Libyan finance
ministry conducts foreign investments through the Libyan Arab Foreign
Investment Company, which has invested US$500 million in 45 countries.

TOURISM.

Libya has an underdeveloped tourist industry, although it has the
potential to grow. As a Mediterranean country with long warm beaches and
historic sites, Libya could attract many Europeans who currently
vacation on the inexpensive warm coastlines of Libya's North
African neighbors Egypt and Tunisia. The industry, however, lacks an
adequate infrastructure such as hotels. Furthermore, the
sanction-related fall of tourism has turned many Libyan beaches into
garbage dumps. Anticipating an upsurge in the tourist trade in the wake
of the lifting of UN sanctions, a tourist center, including a large
hotel and entertainment facilities, is being built in Tripoli.

TRANSPORTATION.

The Libyan transportation industry is significant, but has suffered a
great deal from sanctions. Its merchant fleet consists of 27 vessels and
is oriented towards oil and gas exports. Libya's civilian air
fleet, under-utilized from the sanctions, will be expanded by the
purchase of 24 Airbuses as part of a government plan announced in 2000.